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Not all life insurance policies are created equal
Going for the first cover that you stumble across can be a huge mistake. That’s why it’s important that you put in the effort to research and compare policies that you come across to get the best deal. This is a decision that impacts what will happen when you are gone. Ask your insurer questions concerning the cover until you are satisfied. An insurer who has your best interest at heart will go through the policy with you to ensure that you choose a cover that best matches your needs.
I’ll do it when I am older syndrome
Life insurance reminds us that we don’t have forever to live and it’s best that you be prepared sooner than later. Unfortunately, a survey released by TAL found that only 30% – 37% of Australians aged 18 – 69 held life insurance. It is for everyone, so long as you are of a legal age to acquire it which is 18 years and above.
You can cash in on your youth and health as premiums are usually cheaper when you are young. Life gets complicated the older you get, illnesses creep in and your body will not be able to do the things that it used to do, causing insurers to make you pay more.
Failing to strike a balance in terms of how much you need
Overspending on life insurance can work against you by leaving you with debt for a policy that you cannot afford or need. However, if you are looking to skimp on how much you pay you could end up shooting yourself in the foot, leaving you underinsured. According to Swiss Re Economic Research & Consulting, Australia is one of the most under insured nations in the develop world ranking 16th.
It is important that you speak to an insurer or use an online life insurance calculator that will help you see how much cover you need that is adequate to cover you. If you underestimate it can impact your family negatively as they will have to deal with the brunt of meeting mortgage payments, fees and medical bills that they can no longer afford.
Lying on your application
That little white lie eventually snowballs into something that your family will have to deal with. You need to disclose all necessary information to your insurer to make the processing of your application smoother. This also goes for fibbing on your health to save a few bucks. Disclosing all pre-existing health issues and answering the questions set by your insurer is in your best interest. It will enable you to get an adequate cover that won’t leave your family in a financial woe.
Not getting your stay at home partner life insurance
Your partner may not be beating traffic every day to rake in some money for the family, but they too need life insurance. They also play an important role in the household and should they pass on you will need that extra help to make your household function as normal. It will also assist you if both you and your partner were planning to put some money away to build a savings account, pay off debt, or pay off school fees together.
Not nominating a beneficiary
A general rule of thumb is if they are not listed they will not be covered. It is vital that you list all the people you would like to get covered in your policy. Even if they are a young beneficiary you can list them so that they can have a trust fund that they can use in future. It’s advisable that you set up a trust fund yourself and stipulate how and when the money should be used.
Not reviewing your policy
Although life insurance is set for life, you as a person change every year. That is why your policy will have to adapt to your needs. The single 18-year-old version of you with no kids is different to the 34-year-old version of you who has just started a family. Speak to your insurer to make sure that you get a plan that keeps up with the times.
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This guide provides general information and does not consider your individual needs, finances or objectives. We do not make any recommendation or suggestion about which product is best for you based on your specific situation and we do not compare all companies in the market, or all products offered by all companies. It’s always important to consider whether professional financial, legal or taxation advice is appropriate for you before choosing or purchasing a financial product.
The content on our website is produced by experts in the field of finance and reviewed as part of our editorial guidelines. We endeavour to keep all information across our site updated with accurate information.
Savvy is partnered with Compare Club Australia Pty Ltd (AFS representative number 001279036) of Alternative Media Pty Ltd (AFS License number 486326) to provide readers with a variety of life insurance policies to compare. Savvy earns a commission from Compare Club each time a customer buys a life insurance policy via our website. We don’t arrange for products to be purchased from these brands directly, as all purchases are conducted via Compare Club.
Savvy does not compare all life insurance policies or providers currently operating in the market. Any advice presented above or on other pages is general in nature and doesn’t consider your personal or business objectives, needs or finances. It’s always important to consider whether advice is suitable for you before purchasing an insurance policy.
For any further information on the variety of insurers compared by Compare Club or how their business works, you can read their Financial Services Guide.